WASHINGTON (AP) – Federal regulators say five of the biggest banks in the U.S. haven’t worked out strong plans for how they might reshape themselves in case of failure, which could leave them unable to survive without another taxpayer bailout.
JPMorgan Chase, Bank of America, Wells Fargo, Bank of New York Mellon and State Street Bank were cited Wednesday by the Federal Reserve and the Federal Deposit Insurance Corp. for gaps in their bankruptcy plans known as “living wills” that they were required to submit. The five banks – with a total of about $5.6 trillion in assets – were among eight Wall Street behemoths whose plans were evaluated.
The two agencies found the five banks’ plans are “not credible” or insufficient for an orderly restructuring in the event of bankruptcy. The regulators gave the banks an Oct. 1 deadline to fix the problems or face possible “more stringent” requirements. That could include ordering the banks to beef up their capital cushions against unforeseen losses. If the regulators still weren’t satisfied, banks eventually could be forced to sell off assets.
The news comes in a week when several major banks are expected to report weak earnings for the first quarter.
“We are going to do everything we can to fix this issue,” JPMorgan CEO Jamie Dimon said in a conference call with reporters.